Barclays reveals profits slump

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The group posted £2.75 billion of pre-tax profits for the six months to June 30 after racking up another £1.1 billion of credit crunch impairments on top of the £1.7 billion reported during the first three months.

Barclays chief executive John Varley said the group had experienced "significant" write-downs and that profits decline was "acutely disappointing".

Barclays said excluding sub-prime related charges, its bad debt charges increased 40% during the period. The group's total for such impairment charges and credit provisions was £2.45 billion during the first half, up from £959 million a year ago.

While write offs among its UK mortgage book remained "very low", and increased slightly at the UK's retail banking arm, Barclays said it suffered "significant growth" in impairment charges relating to international retail and commercial banking businesses.

The bank has 11.5 million UK customer accounts, and 786,000 mortgage accounts.

At the company's credit card operation Barclaycard - which has 11.9 million UK customers - bad debt charges increased 10%, reflecting the inclusion of the recently acquired Goldfish business and increased charges in Barclaycard International.

Barclays' investment banking arm appeared to be among the worst hit areas thanks to the credit crunch write downs. The division, which is headed up by American banker Bob Diamond, saw pre-tax profits slump 68% to £524 million.

Mr Varley said: "The conditions in the market that we have seen over the course of the last 12 months are as difficult as we have experienced in many years. Although I take some comfort from our relative performance in managing our risks and in generating income, a decline in profit of 33% is acutely disappointing."

He added that market conditions over the foreseeable future will remain tough, "not least because we are now seeing the impact of slowing economies around the world and that means that we must remain very vigilant to managing risk."